Gary Savine: The Hidden Risks of Growing a Law Firm

Voiceover: Welcome to the 1958 Lawyer, the show for attorneys who know the old model isn’t working anymore. The billable hour, the 12-hour day, the expensive office no one visits. Your host, Ron Bockstahler, and Clinton End are here to question all of that and more by exploring smarter, healthier, more flexible ways to run a law firm. No more burnout. No more outdated expectations. Just real conversations with attorneys who are proving there’s a better way. If you’re ready to build a law firm that’s profitable and livable, you are in the right place. Now here are your hosts, Ron and Clinton.

Ron Bockstahler: Let’s talk about when these you got these PEOs now, Insparity. I don’t know all, but we or you know paychecks or just these. They’re not all co-employers, but some are co-employers. So how does that play into the need to make sure you got your own ducks in a row? Oh,

Gary Savine: that’s a great question, and it’s often that often creates confusion for employers more more confusion than they bet on when they engaged a PEO. And I’m not here to disparage PEOS. I think PEOS offered fantastic services, and they allow for the outsourcing of a lot of administrative functions. But bottom line is, you still remain an employer, and you still carry with you employment law liabilities. And the misconception that I see arise in a lot of my clients who use PEOs is that they believe that as soon as that they take an employee off their books, they make the employee a w2 employee of the PEO for administrative purposes. That washes their hands of employment law liabilities. But the reality is they’re probably in most cases a joint employer with the PEO of that employee for legal purposes, and what that means is that they can still be sued in all the ways that they could have been sued when they were when they had that direct w2 relationship, and even worse because they are no longer the w2 employer of these employees, it fosters a mindset that they don’t that that that it’s no longer their responsibility. So I see employers in these circumstances; they start cutting corners. They start their respect level for employees often goes down. Their day-to-day interactions, their day-to-day management of employee conflict, and their risks end up rising. And I think it’s also important for anyone using a PEO firm to take a close look at the agreement that they’re signing with that firm, because those PEO contracts they often, if not always, include indemnity language. The PEO is going to shift liability to the principal, to the to the client, to the to the to the business to cover any employment law liabilities that arise when those workers do sue. We

Ron Bockstahler: just talking about some indemnity issues recently, Clint.

Clinton Ind: Yeah, and everyone’s shifting indemnity, right? I mean, and you you would expect it, I suppose. You’re working with with attorneys, and you would expect them. Maybe not always working with attorneys, but you would expect them to see that. But I don’t know the the presuppositions of how this relationship is going to work and how it how it should work probably just take over, and no one reads the fine print, probably.

Gary Savine: Yeah, and you know, I’m aware of at least one CEO firm, and I’m not going to name them. But I’m aware of at least one CEO firm that has begun to shift away from the model of of taking on a client’s employees as w2 So I’ll still provide the administrative support, but they’re not taking on the w2 relationships anymore. And I wondered why. Like, is it because clients are starting to push back on this request for indemnification, or is it something else? Time will tell whether this is a an industry trend.

Ron Bockstahler: Ah, that’s interesting. What are you seeing? Because now we’re seeing a lot of offshore work. Maybe maybe some industries have seen that for a long time, but we’re starting to see it quite a bit more in the more professional industries. How is that? What do we got to work out for there? What’s the? We’re going to get caught somewhere. So what do we got to be paying attention there?

Gary Savine: Yeah, that’s a good question. So I’m an Illinois employment lawyer, not an international employment lawyer. So I’d be careful talking on a turn in terms of what the obligations are overseas. Although I do, I’m fortunate enough to have past in-house experience where I was managing legal issues across 40 countries, and I remembered from that work that the. Shoring only complicates compliance because most countries they have every country has their own set of laws as you can imagine and most countries their legal systems don’t operate like the United States and and what I learned from that role was you as an as an American lawyer as a U.S. based and American trained lawyer. I have to often turn off my assumptions about how employment law will work when dealing with an with a dispute overseas. So anyone who’s offshoring their work through a direct employment relationship, or they’re calling it a contractor relationship, just keep in mind you’re calling these individuals contractors, and the notion that you’re that’s in your mind of what a contractor is is based on U.S. law concepts. But those U.S. law concepts might not really apply to that relationship, and you might be setting yourself up for risks down the road.

Ron Bockstahler: Interesting.

Clinton Ind: Yeah, yeah. Contractor can mean all sorts of things depending on where you’re where you’re employing somebody. Yeah, that’s exciting.

Gary Savine: Yeah, and something that I would add to that that comes to mind with clients of mine who offshore work. Well, any client of ours who is multi-jurisdictional, whether they operate in multiple states or across borders in other countries, we, from time to time, we partner with attorneys in those non-Illinois and non-U.S. jurisdictions to ensure that we’re all staying on top of the lay of the land of those laws, so that they that they’re made aware of those risks, they have they build and maintain a baseline knowledge of how the laws differ across those jurisdictions. So anyone who is offshoring their work, and since this is a an attorney audience, it would be wise for you to seek counsel in those countries just to get a baseline of of what obligations you are taking on that you may not know.

Clinton Ind: Our audience loves hearing that we need to layer in more attorneys. They just do. Always, every every single one of them. Layer in some more attorneys, get some more advice. I love hearing it, Gary.

Ron Bockstahler: Gary, I mentioned I talked to one of your staff before getting ready for the show, and they talked about some program you’re doing with a lot of your clients, a lot of people that are just looking to get some answers, some questions about the EPLI. Can you kind of talk about what you’re doing there and how you’re kind of rolling that out?

Gary Savine: Yeah, and actually, I appreciate the question, Ron. EPLI is employment practices liability insurance. It’s it’s often paired with your property and casualty insurance for your business. It can be part of the policy. Could be a standalone policy, but it’s it’s critical coverage for any business with even one employee. I like to say operating without EPLI insurance is like driving a car without a safety belt. EPLI protects you by covering the most common employment claims that you’ll face as an employer, whether it’s a discrimination claim or a harassment claim or a wrongful, wrongful or discharge claim, and most importantly, it covers your defense costs because, as our lawyer audience knows, even a frivolous claim can cost a business up to $100,000 or more just to defend it, and EPLI exists primarily to defend that, to fund that defense. So what we are doing for our clients and our prospects is we are helping them get past the misconceptions about how their insurance protects them, and give and and and we we’re giving them food for thought, take back to their brokers to ensure that they are properly covered on the EPLI front. Because we’re discovering, we we we’ve learned from experience that most businesses, whether they’re law firms or in any other sector, they carry misconceptions about how their insurance will protect them if they’re sued. Like they they’ll think that EPLI covers everything employment related, like it’s employment immunity. And we help them understand: no, you you have EPLI coverage, yes, but it only covers these types of matters. You still carry the bag on all of these liabilities, all of these obligations, and you need to understand the difference so that you can exercise good compliance hygiene from day to day and year to year. And we also want people to understand that how much coverage is enough coverage? And these are questions that they often talk through with brokers. But we are finding no offense to brokers, but brokers are often ill-equipped to explain to clients how EPLI works in the real world when. Complaints arise. You know, ETLI is what what it provides what we call eroding coverage, which is unique phenomena. It means that your your defense costs are included in your coverage. Yes, but those defense costs are drawn down. Or excuse me, the defense costs draw down your your coverage as as the case is defended, and that leaves less and less money available to cover settlements and judgments. So we’ve discovered a lot of clients will come to us with their lawsuit, and we’ll start defending them with the carrier’s approval. We’ll discover very quickly that their coverage was insufficient. It was so low that we that we’d eaten through it with our defense costs pretty quickly. And as businesses grow, they need even more coverage because lawsuits tend to come in bunches because one one brave act emboldens other disgruntled employees to file suit. So that eroding coverage phenomena, or that feature of EPLI coverage, makes the the importance of makes that coverage level that you maintain for your business as it grows even more important. So what we’re doing for clients, long story short, is we are offering a complimentary review of their insurance policies and walking them through what their EPLI coverage does and doesn’t do, what they should consider talking to their broker about, and what they should also consider working with an employment lawyer to to maintain to build and maintain their insurability.

Ron Bockstahler: So yeah, is this out? I don’t know. This is probably out of the range because EPLI insurance is different. But you also got cyber insurance, and you got you know e you know insurance now. And and I’ve been doing running my company 24 years, and I still get confused by what’s covered by what and who does what. Yeah, I tell Clint, let’s just get them all. Yeah,

Clinton Ind: right. We trust this broker. Just add another one in there. No big deal. I don’t know. Do you look

Ron Bockstahler: at all of those, or you just really focused on EPLI right

Gary Savine: now? Yeah, we’re only looking at EPLI. We’ve got it working now with those other forms of coverage. We leave it to the broker to help the client manage their their their total portfolio of of insurance. Our role as employment lawyers is to help them understand this peculiar world of employment viability when they start hiring staff, and give them that working knowledge of their insurance so that they understand how the insurance can and should work in tandem with their investment in an employment lawyer, and how they should, and they can so that they can take that knowledge and have meaningful conversations with their broker about what that EPLI piece of their insurance portfolio should look like. And

Clinton Ind: you also then kind of help out, you know, talking a lot about compliance and making sure that you know your clients can you know tailor their compliance functions to what is covered and what isn’t covered by EPLI. But I often have found, or at least I did find in my practice, that is really difficult for a business, a company, a CEO or COO, to take a legal document like a an insurance document and make that work for their own compliance. You know, internal systems because you can’t translate those directly. Do you help companies like work through that that system of figuring out what an appropriate mechanism for compliance would look like internally.

Gary Savine: So I think your question is: Do we help them build a compliance,

Clinton Ind: an

Gary Savine: employment law compliance program that’s tailored to their business?

Clinton Ind: You know, it was more along the lines of, yeah, I didn’t really mean to say the help to build an entire compliance program, but I guess do you give advice associated with that?

Gary Savine: Yeah, we sure do. In fact, yeah, I’ll I’ll I’ll start from the standpoint of the advice that we give in conjunction with their efforts to secure and maintain EPLI insurance because I think that’s the connection that you were that you were trying to make.

Clinton Ind: Yeah,

Gary Savine: yeah. Just and and here I really want to talk to our law firm owner audience. I think it’s important for you all to recognize listeners that you’re not easy to insure. Your lawyers, your lawyers, you are just like

Clinton Ind: demanding, demanding demeanor. Like I got short deadlines. You know, I know I’m about to blow that discovery deadline, but you got to help me fix it. Yeah, right. Gotcha.

Gary Savine: Well, I think we’re like think about it from from the standpoint of put yourself in the shoes of the carrier. The carrier is assessing whether you are. A worthy insurable risk, and they’re they’re measuring that based on what they believe is the likelihood that your business is going to generate disputes that you’re going to have to cover. Well, most law firms we are dealing in disputes, we are dealing in conflict, so we are combative by nature, and our workers are combative by nature, and on top of that, our workers are generally informed, or think they’re informed, on the law. So that’s kind of a volatile mix that makes it more likely that a law firm is going to generate coverable claims than a technical business. So getting approval for EPLI coverage is a bit harder for a law firm out of the gate than for a a business outside of our sector. So you can expect, and this is where we come in. You can expect as a law firm that you’re going to receive greater scrutiny from a carrier of your employment practices and your employee relations history when you apply, they’re going to ask you a lot of questions, like to to see if you demonstrate good compliance hygiene. Are you updating your employee handbooks and policies? Are you training your managers on new laws? Are you keeping all the important and critical employment records intact and up to date? Like like are you recording the time worked and PPO, and are you properly maintained personnel files? And also, they’re going to look at whether they’re going to ask you a lot of questions about: Do you manage conflict well when it arises in the business? Are you investigating complaints? Do you have a complaint process? Do you review outcomes and decisions with an employment lawyer before you make decisions. These are just a few examples of the questions that your carrier is going to ask, and this these are the areas that you help businesses ready before they have to answer those questions, so that they can present themselves as the worthwhile risk carrier and get good coverage. And when I say good coverage, I mean coverage at the right premium because EPLI tends to be more expensive than other forms of insurance, and that the that and that the policy isn’t riddled with carveouts. And then there are things we do on the renewal side as well. But I’m going to stop there. Hopefully that gives you a sense of of how we pair the business to get them insurable.

Ron Bockstahler: You know what we’re going to do is going to make sure that we’re going to put your contact. We’re gonna put your calendar in the show notes so people can just book on your calendar and talk to you and take that conversation to the next next level.

Gary Savine: Our pleasure. Yes,

Ron Bockstahler: conversation everyone needs to have. Tell us, talk to us a little about. You’ve been on your own now for 14 years. What’s it like from? And I remember we had coffee, and you’re like, I was a different when I started. I was solo. Now there’s you got several people at your practice, you’ve grown. It’s your mindset’s different, and especially talk about coaching because I know that’s a you know it’s a big thing and it’s really helped you. So

Gary Savine: yes, yes. So I I’ve been practicing for close to 30 years. My law school 30th law school reunion is this year.

Ron Bockstahler: Wow. It’s

Gary Savine: about 14 years ago that I decided to leave in-house life and start my own firm. And I knew the law, but I didn’t know how to run a business. Well, and I had to decide where do I invest first. So fortunately, I found a great sales coach in Chicago and learned first how to sell, which in some ways in our world how to build relationships of trust and convert those relationships into client relationships that keep coming back and beget other client relationships. So once I got that under my belt, I had to find good a physical space, a physical plant to run this firm, and that’s where Ron came in at Amata came in, and we’ve been tenants of Amata since 2016, and they’ve allowed us to flex up and down as as as our needs have changed. But I think the the the most the the most recent most critical ingredient to our growth has been business coaching. We’ve been members of a firm called How to Manage a Small Law Firm for about five years. This is a Miami-based firm that provides business coaching for for lawyers. It teaches you how to run a law firm like a business and get get you out of that mindset thinking as your of yourself as just a lawyer with a with a desk. You are an entrepreneur. You are a growth engine, and you’re building a saleable asset. And you can’t do that effectively unless you understand as a business owner all the parts of the business, and you know and understand how to manage those parts. So it starts with coaching on the fundamentals, and then over time, as you get better at this, whether you’re using how to manage a small offer or any coaching firm, we’ve learned that the best next step is to build out a fraction. C-suite of the experts that we would eventually in-source as we grow sufficiently to justify it. So we took on a fractional CEO to set our business plan and strategy, a fractional CFO to help us manage our books and and use our financials to to plan and monitor and execute on growth, and we’ve also taken on a fractional CMO to sharpen and perfect our marketing. And most importantly, we’ve taken on a fractional COO to help us put in place policy, systems, procedures, and those critical workflows that simplify our the way we the way we operate and build a foundation on which we can scale. And right now, with AI emerging and changing the way that everything is done, it’s so important to have systems that you can blend that systems in place on which you can layer AI on top and really layer AI or really inject AI into the business to scale up even faster. So that’s how we’ve changed over the years.

Ron Bockstahler: You brought up a key point there. You run into creating a saleable business, and that’s what so many of the attorneys that I know that I work with just it escapes them. That’s not in their mindset. It’s not what they’re thinking. It’s

Gary Savine: it’s incredible, isn’t

Ron Bockstahler: it? Yeah, yeah.

Gary Savine: And I think it in in this moment in particular, where we’re facing the prospect as a as a profession of private equity coming in and investing in law firms, those who aren’t thinking about their businesses as salable assets and are just going on the day to day, they’re going by day to day, practicing law without building systems, with without building a business that can easily be bought and sold, they’re going to be left behind.

Clinton Ind: Yeah, it’s more than the individual, isn’t it? It’s more than just having a law degree and a desk and your Lexus passcode and being able to go to court. Or, yeah, it’s such a crucial consideration to keep in mind. You’re a rarity to have done the the extent to what you’ve done. It’s ridiculous.

Gary Savine: Well, I’ll I’ll pay Ron a compliment because this is where being in Ron’s orbit has benefited me. I’ve been with a model long enough to watch good entrepreneurs in my midst grow their businesses. Ron is no exception, and Ron, I learned a lot from you.

Ron Bockstahler: I appreciate it. It’s it’s it’s crazy if you think about the legal industry. I’ve always said it’s one of the most fragmented industries in this country, with 80 85% of attorneys actually at law firms are five or fewer, and a good majority of them in solos. It will consolidate. There’s going to be a consolidation because that’s how the world works. You know, economies of scale that pay off. So that’s coming. And Gary, I think it’s the attorneys such as yourself that are actually doing that, build that firm that’s a sellable firm, are going to be the most successful.

Gary Savine: Well, I’m happy to preach the gospel to anyone who audience who wants to learn more about how to change your mindset about coaching, how to change your mindset about running your firm, it’s something that I’m most proud of about the last 14 years in practice. The last 14 years have been the most exciting years in the 30 years that I’ve been practicing law.

Ron Bockstahler: Let’s go back. You’ve been practicing law for 30 years. What would you tell your young self? Your, I mean, I don’t want to say age, but you’re. I’m practicing 510, years. I’m. What what what would you tell yourself, and what advice would you give to the younger attorneys right now listening, saying, “Hmm, how do I get there?

Gary Savine: It’s going to sound so cliche, but I’m going to say, start making connections and learning how to network before you graduate law school, in fact, consider law school as training ground for networking and building the relationships that that will fuel your success. I can say without a doubt that we would have grown faster had I adopted that mindset sooner in my professional career. Coming out of law school, my nose was to the I kept my nose to the grindstone at large firms, just cranking out the work and not thinking about relationships, figuring that that would take care of itself over time. And then I shifted in house and put my nose to the grindstone and just supported the business that that employed me and just gave sort of short shrift to building relationships, and I’ll give credit to my first sales coach when I got my my shingle up and and started started the firm 14 years ago. He got my head on straight pretty fast, but that still put me behind the eight ball. Learning how. Network effectively means learning how to cultivate relationships that that involve you giving, and giving is a habit, and giving effectively is a skill, and it’s something that takes a lot of practice. I’m sure that both of you can attest to that as well.

Ron Bockstahler: Absolutely, I’m

Clinton Ind: still working on it, Gary. It’s a work in progress. It’s a work in progress for all of us, yeah.

Ron Bockstahler: You know, I I’ll plug Steve Fretzen. Steve is amazing. I don’t know who your coach was, but I’ve Steve Fretze, always a Steve Fretzen. It was. He’s amazing. He just, I mean, look, he’s no bull. He’s just like, let’s lay it out. Here’s what you’re going to have to do. Here’s how you do it, but make it feel comfortable. And by the way, it’s not sales. It’s connecting, you know. It’s it’s not upselling. It’s like it’s providing people what they need, but you got to actually kind of look. Let me show you why you need that. Right, it’s justification. So Steve does such a great job, and I know he primarily works with attorneys. That’s kind of his world. He is definitely someone you want to talk to if you’re getting up there and getting started.

Gary Savine: I agree. I’ll add to that, and I can’t remember if it was Steve who used these words, but it was certainly implied and under and was in everything that he taught. And it’s something that we tell our our team: sales isn’t something you do to someone; it’s something you do for someone. So it puts you in a service mindset that when someone reaches out to you, or you’re talking to a prospect, you you know that you’re there to solve their problems. And if you can think about, and the same applies to to networking, you’re there to do something for the person that you’re talking to. Not yeah, networking isn’t something that you’re doing for others. It’s something that you’re doing for others. Yeah,

Ron Bockstahler: it’s it’s funny you say because I always thought about networking is is I’m there to help someone. How can I help them? And that’s all I need to think about because things always come back to you, right? It just that’s how it works. But if you’re out there thinking about other people and how you can take care of them and get what they need, it’s going to work for you also.

Gary Savine: Yeah, I think when it comes to networking, the other thing I would tell my younger self to round out the answer is remember that relationships are live or die by follow up and follow through. So if you make a promise, fulfill the promise, and and don’t just make promises to them directly. Make promises to yourself on how you’re going to follow up. Create systems for following up so that one contact doesn’t. Every time you make a contact, it doesn’t go stale. It actually leads to something that’s fruitful for both of you.

Clinton Ind: Absolutely, that’s great advice. Yeah,

Ron Bockstahler: we got to get wrapping up here. Clint, last couple words. I’ll give Gary the final word.

Clinton Ind: Listen, we were actually just talking earlier, Gary, about you know recruiting or selling our Amata services to newly minted attorneys. Right? You come out of law school, you don’t know anything for those who need to hang up, need or want to hang up their own shingle, and we were talking about, you know, having what advice we give and how we how we promote those. And there’s like a third year. Here’s how you do it. You know, here’s a third year class. Here’s how you start your own firm. But the first year class we were talking about was be friends with everybody. Right. Start that contact. Start that. It’s probably not a full class. It’s probably one one little show up at one class, but that is the thing. You spend the next three years getting to know and being nice to and following through and following up with every single person in your class because they are the people who are going to help you out, and you’re going to help out in the course of your entire career. It’s it’s a huge thing, so I appreciate you bringing that up, it’s and the I guess the other thing I’d say is it’s it’s fascinating that that should never die either, right? That’s a that might be something you tell somebody as a first year, but every single year of your life, you’re being nice, you’re following through, and you’re and you’re making contacts.

Ron Bockstahler: I will. I’ll just throw in a super successful attorney, Chris Esbrook, good friend, longtime client. He’s off. He grew his firm. It’s growing like crazy. And I remember sitting with him one day. Just actually, I was overhearing, talked to an attorney who was kind of being rude at some staff members. He said, “There’s never ever a reason not to be nice. And I thought, “Wow, that’s. I was just listening to him say it. I thought that was just amazing. That’s as meant, and that’s successful attorney, right? That’s if you’re successful, those are the things you’re thinking about. So, Gary, last word.

Gary Savine: I’ll piggyback on Clint’s comments on friendship. A great lesson for a first year lawyer or a 1l Friendship is. is something that becomes harder to maintain and harder to create as you get older, and certainly as you navigate your legal career, you’re going to find, just as if you were any other line of work, our our friendship groups tend to win out. Over time, so building friends is as important as building your professional network. And the more, the better you, better the better job you do at seeing the people you network with as your friends, as opposed to seeing them as transactionally as sources of business. You’re going to end up having a much more satisfying life.

Clinton Ind: Yeah, yeah, so true.

Ron Bockstahler: Gary, so glad you’re here. Thanks for joining us today. We really appreciate Gary survives the unemployment law. We’re going to put his contact information, his calendar up in the show notes. So please reach out to Gary. He’s a super person to talk to and work with. And clearly, as you heard today, he knows what he’s talking about. Makes sure it’s exciting. Yeah, you and thanks, guys. You’ve been listening to the 1958 lawyer. Thanks for joining us. We’ll see you back here next week.

Voiceover: Thanks for listening to the 1950-eight lawyer. If you like the show, tell a friend, and please subscribe, rate, and review us on Apple, Spotify, or wherever you get your podcasts. If you’d like to hear more about Ron, Clinton, or Amata, go to amataoffices.com That’s amataoffices.com All the links are also in the show notes.